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Fed’s On-Again, Off-Again Economy

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Which way is up?

Christopher-LemieuxSMBullion.Directory precious metals analysis 15 April, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Senior FX and Commodities Analyst at FX Analytics

The Fed’s beige book, which is a composite of economic activity across the 12 Fed districts, suggested that the economy is not as peachy-keen as St. Louis Fed Bank President James Bullard indicated today. Traders focused on “slight” and “moderate” that were used to describe the economic growth. 

Key factors that were listed as headwinds to growth included the West Coast port strike, lower oil prices and the weather, which was cited 71 times. What stuck out specifically was the much lower manufacturing performance with profits down significantly.

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Lower energy prices were defined by the Fed as a great thing for the consumer, yet failed to acknowledge the potential problem of lower oil prices for a prolonged period of time until recently. The beige book cited that layoffs and hiring freezes are beginning to take its toll on regional economies.

The shale boom was a beacon of growth throughout the mid-west, while other portions of the country were struggling post-recession. However, as the commodity boom popped, mass-layoffs began hurting states like Texas, which accounted for 24 percent of total jobs gained since 2009.

The equity markets loved the slow-growth news, as it means the Fed will keep lax monetary policy as long as possible. Gold and silver jumped, as the dollar retracted, on the same reason equities jumped higher.

But, let’s stay positive. The Atlanta Fed GDPNow tracker ticked slightly higher to .2 percent from zero.

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